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Understanding How CX Drives Good and Bad Profits
Customer experience (CX) has become the overwhelming top initiative for business leaders. CX is now the top brand differentiator; those that deliver an excellent CX thrive, while those that do not eventually fail. It outweighs the price, product quality, and every other factor when customers choose a brand. Loyalty can be fleeting though. In 2021, 67% of millennials dropped a brand because of a single bad experience, per my research.
This is why the majority of digital transformation initiatives revolve around CX. However, businesses may be moving forward with initiatives that they think are successful but are not. This concept was crystallized in my mind in the sixth chapter of the book “Empathy in Action,” authored by Tony Bates, Genesys CEO and chairman, and Dr. Natalie Petouhoff, customer experience business value consulting, sales enablement and thought leader for Genesys. The chapter titled, “Experience Drives Good Profits and Bad Profits” discusses this concept in detail.
Understanding the concept of bad profits is important. Conceptually, one might think that if a company is doing an activity, and that activity is driving profits, then it must be good. But profitability could be short-lived if it’s driving a negative experience.
The book cited an example from marketing researcher Fred Reichheld on how a bank was charging customers $120 to reorder checks. The bank did this because customers only had one place to go and were trapped. However, after realizing they could order the same checks from Costco for $12, the customers decided to go elsewhere. One of the biggest contributors to bad profits is what the book refers to as “mass produced customer experiences” where a company would use a traditional marketing technology tool and CRM system to cast a wide net to get customers’ attention. This was the norm in the past, but today customers want and demand personalized interactions. “Matching products or services with ‘average customers’ can easily fail as average customers simply do not exist,” the book stated.
The chapter provides some recommendations on how to create a differentiated, personalized experience that can lead to good profits. These are:
- Customer journey mapping. This technology enables brands to create accurate storylines about each customer’s brand experiences, allowing for real-time, customized interactions in moments of need. It cautions to not think of a journey as linear as that is not how people research, shop, and engage services.
- Omnichannel experiences. Often omnichannel and multichannel are used interchangeably, but they are quite different. As the name describes, multichannel uses multiple and discrete channels, whereas omnichannel allows for the context of each interaction to remain across multiple channels. The chapter also explores other multichannel issues like losing channel context and disconnected channels. These are well-known issues in the contact center industry but are likely new to business leaders.
- Poor employee experience. The book breaks this down into subtopics, such as mass-produced employee groups and poor employee context. A business can’t achieve CX excellence if the employee experience is bad — negative employee experience will ultimately impact CX. Mass-produced employee groups have the same issue as mass-produced CX, where it seeks out the average employee and clusters them. Poor employee context happens when the employee does not have enough information from the bots or other info to service the customer effectively.
- Business-centric-only metrics. Most businesses love their key performance indicators, focused an outdated emphasis on driving efficiency. In the contact center, they measured things like average handle time (AHT), first contact resolution (FCR), and so on. But success with these can give a false impression of CX. A contact center agent may not fully solve a customer issue to reduce AHT and improve FCR. But what if the customer issue was not fully resolved? This defeats the purpose. The book recommends looking at metrics through the customers’ eyes and building metrics that can measure how to deliver excellent experiences to the customer.
- Misunderstanding digital proficiency. One of the more thought-provoking statements in the chapter was that “customer experience no longer depends on digital proficiency.” In the early days of the web and social media, it did, but digital experiences are far more intuitive today, resulting in prolific use across all demographics. Customers no longer fit into neat, tidy groups that are aligned with age (such as millennials, Gen Z, or baby boomers.) Customers select channels based on ease of use or situation. For example, chat works well in noisy environments, but voice is better at home with a confusing situation. Companies should not pigeonhole customer channels by segment. Instead, let them choose what works best for them.
- Data breaches. The book highlights this as an issue as it’s hard to gain back people’s trust once a breach occurs, but companies never set out to be breached. The mention in the book underscores the importance of data and privacy and poses an interesting thought. “Companies have an opportunity to transition from using customer data for company good to using it for customer good,” the book states. While it doesn’t tie that statement to security, it does recommend using the information to create more personalized services.
In summary, the chapter does a nice job of painting a picture of the new competitive landscape. Businesses need to make empathy, trust, and loyalty their new North Star, and that starts with a customer experience that leads to good profits.